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2016 (1) TMI 567 - ITAT PUNE

2016 (1) TMI 567 - ITAT PUNE - TMI - TDS u/s 194C - Disallowance u/s 40(a)(ia) - non deduction of tds on payment to sub-contractors as the amount of payment exceeded ₹ 20,000/- on each - whether the provision of section 40(a)(ia) is attracted only in respect of payments which is actually payable as at the end of the year and not which is paid during the year? - CIT(A) rejected additional evidence presented - Held that:- As for assessee argument that the liability u/s.40(a)(ia) is restricte .....

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t the end of the year. Therefore, the first limb of the argument by the Ld. Counsel for the assessee is rejected.

So far as the second limb of the argument of the Ld. Counsel for the assessee that the sub contractors have furnished Form 15G and therefore there is no liability to deduct tax is concerned, we find the Ld.CIT(A) did not accept the additional evidences filed before him on the ground that assessee had not explained the reasons for non furnishing of the same before the AO. C .....

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addition u/s.40(a)(ia) is concerned, we find the Hon’ble Bombay High Court in the case of Nirmala L. Mehta (2004 (4) TMI 43 - BOMBAY High Court) following the decision of the Hon’ble Supreme Court in the case of The Amalgamated Coalfield Ltd. Vs. The Janapada Sabha, Chhindwara [1962 (9) TMI 60 - SUPREME COURT OF INDIA ] has held that acquiescence to an illegal tax for a long time is not a ground for denying the party the relief that he is entitled to. Thus we restore this issue to the file of t .....

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s appeal filed by the assessee is directed against the order dated 01-11-2013 of the CIT(A)-III, Pune relating to Assessment Year 2008-09. 2. Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of civil construction mainly carrying on drainage and excavation works for BSNL and also maintenance works. He filed his return of income on 29-09- 2008 declaring total income of ₹ 6,98,560/-. During the course of assessment proceedings the AO noted tha .....

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for the addition of ₹ 43,76,025/- for non deduction of tax at source on payment to sub contractors. In view of the above and applying the provisions of section 40(a)(ia) the AO disallowed an amount of ₹ 43,76,025/- to the total income of the assessee. 4. Before CIT(A) it was submitted that the outstanding creditors as on 31-03-2008 is ₹ 22,92,025/-. Further, out of the total payments made to the sub contractors at ₹ 43,76,025/-, as extracted by the AO in the assessment or .....

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cted only to the expenditure which is payable at the end of the year. Therefore, the disallowance, if any, can at best be made only in respect of outstanding expenses of ₹ 12,65,081/- relating to this year. 5. In his alternate contention it was submitted that since the sub contractors had furnished Form 15G, therefore, provisions of section 40(a)(ia) are not attracted. In support of the above proposition, the Ld. Counsel for the assessee relied on the decision of the Mumbai Bench of the Tr .....

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nts advanced by the assessee. So far as the argument of the assessee that provisions of section 40(a)(ia) of the Act is attracted only in respect of payment which is outstanding or payable as at the end of the year is concerned, the Ld.CIT(A) following the decision of Hon ble Calcutta High Court in the case of Crescent Export Syndicate reported in 85 CCH 056, the decision of Hon ble Gujarat High Court in the case of Sikandar Khan N. Tunwar reported in TS 186 HC 2013 and various other decisions r .....

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proceedings. Further, the assessee has not furnished such 15G forms before the CIT before the 7th day of the month next following the month in which declaration is furnished to him. No proof was furnished to show that the said declarations were forwarded to the CIT concerned within the prescribed time. The Ld.CIT(A) further noted that when the assessee has agreed for the addition before the AO at the time of assessment proceedings, it is not proper for the assessee to challenge the addition in .....

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. He accordingly upheld the addition made by the AO u/s.40(a)(ia) of the I.T. Act. 8. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : 1. The Ld.CIT(A) erred in law and on facts in confirming disallowance of ₹ 43,76,025/- being the payment to sub-contractors by provisions of sec.40(a)(ia) of the I.T. Act, 1961. 2. Without prejudice to the above, the Ld.CIT(A) erred in law and on facts in not appreciating that provision of section 40(a .....

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sions submitted that provisions of section 40(a)(ia) are applicable only to the amounts payable at the end of the year : 1. M/s. Arcadia Share & Stock Broker Pvt. Ltd. Vs. DCIT - ITA No.1871/Mum/2013 order dated 22-12-2014 2. CIT Vs. M/s. Victor Shipping Services Pvt. Ltd. - ITA No.122/2013 order dated 09-07-2013 3. ITO Vs. M/s. Theekathir Press - ITA No.2076/Mad/2012 order dated 18-09-2013 10. So far as non admission of additional evidences are concerned the Ld. Counsel for the assessee ref .....

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mbay High Court in the case of Nirmala L. Mehta Vs. CIT and others reported in 269 ITR 1 and submitted that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. 12. So far as the various decisions relied on by the Ld.CIT(A .....

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fact, he could have no grievance if the taxing authority taxes him in accordance with that statement. If he could have no grievance he could file no appeal. 13. Similarly, in the case of Ramanlal Kamdar (Supra) in the original assessment for A.Yrs 2002-03 and 2003-04 a mistake had crept in while working out interest u/s.139(1)(iii). Thereafter the AO issued a notice to the assessee proposing to rectify the mistake u/s.154 and calling upon the objections of the assessee. The mistake was that inst .....

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ld that the appeals to the AAC and ITAT were incompetent. 14. Similarly, in the case of Mahesh B. Shah and Another (Supra) the assessee as a Member of Cochin Stock Exchange made contributions to the stock exchange funds. This amount though claimed by the assessee as a revenue expenditure incurred wholly necessarily and exclusively for carrying on business was not accepted by the AO and the assesssee himself ultimately agreed for treating this amount as capital expenditure. Accordingly, the said .....

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1992-93 and 93-94. The Hon ble Kerala High Court dismissed the Writ Petition on the ground that the petitioner had agreed to treat the expenditure as a capital expenditure both before the AO as well as before the Revisional authority. No evidence or material was furnished to show that the petitioner was coerced to make a statement. Nothing prevented the petitioner to retract the same. The allegation of compulsion or coercion could not be accepted on a mere statement. No materials had been furnis .....

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the assessee can raise this objection before the CIT(A). 15. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He submitted that in view of the decision of the Pune Bench of the Tribunal in the case of Vinay Ashwinikumar Joneja Vs. ITO vide ITA No.1514/PN/2012 order dated 22-10-2013 provisions of section 40(a)(ia) are applicable to the amount claimed as expenditure during the year on which no tax has been deducted. Further, there was no justifiable .....

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e find the AO in the instant case made addition of ₹ 43,76,025/- u/s.40(a)(ia) on the ground that assessee has not deducted tax on the payments made to the sub-contractors as the amount of payment exceeded ₹ 20,000/- on each and every instance and further the assessee also admitted before him for addition of the same u/s.40(a)(ia). 17. We find before the CIT(A) the assessee made 2 fold arguments. The first limb of the argument is that the disallowance u/s.40(a)(ia) should not exceed .....

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tracted. 19. So far as the first limb of argument that the liability u/s.40(a)(ia) is restricted to the amount outstanding at the end of the year is concerned, the Pune Benches of the Tribunal following the decision of Hon ble Calcutta High Court and Hon ble Gujarat High Court are consistently taking the view that provisions of section 40(a)(ia) are attracted to the whole amount incurred as expenditure during the year on which no tax has been deducted. The same is not restricted to only the amou .....

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AO. We find the Hon ble Bombay High Court in the case of Smt. Prabhavati S. Shah (Supra) has observed as under : . . . . . . . . . . . . . . . . . . . . . . . On a plain reading of rule 46A, it is clear that this rule is intended to put fetters on the right of the appellant to produce before the Appellate Assistant Commissioner any evidence, whether oral or documentary, other than the evidence produced by him during the course of the proceedings before the Income tax Officer, except in the circu .....

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ment or the examination of any witness to enable him to dispose of the appeal. Under sub section (4) of section 250 of the Act, the Appellate Assistant Commissioner is empowered to make such further inquiry as he thinks fit or to direct the Income tax Officer to make further inquiry and to report the result of the same to him. Sub section (5) of section 250 of the Act empowers the Appellate Assistant Commissioner to allow the appellant, at the hearing of the appeal, to go into any ground of appe .....

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ferred on the Appellate Assistant Commissioner under sub section (4) of section 250 being a quasi judicial power, it is incumbent on him to exercise the same if the facts and circumstances justify. If the Appellate Assistant Commissioner fails to exercise his discretion judicially, and arbitrarily refuses to make enquiry in a case where the facts and circumstances so demand, his action would be open for correction by a higher authority. 21. Respectfully following the above decision of the jurisd .....

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im since the assessee has admitted before the AO for such addition u/s.40(a)(ia) is concerned, we find the Hon ble Bombay High Court in the case of Nirmala L. Mehta (Supra) following the decision of the Hon ble Supreme Court in the case of The Amalgamated Coalfield Ltd. Vs. The Janapada Sabha, Chhindwara AIR 1961 SC 964 has held that acquiescence to an illegal tax for a long time is not a ground for denying the party the relief that he is entitled to. The relevant observation of the Hon ble High .....

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s applicable. The said prize money won by the petitioner has been charged to tax as per the law applicable in the Sikkim State where the prize money was won. The Income-tax Act, 1961, was not applicable at the relevant time in Sikkim. So long as the Income-tax Act, 1961, did not become applicable to the State of Sikkim, Income-tax Act, 1961, could not be applied to the income earned in Sikkim. In the circumstances, we have no hesitation in holding that the prize money won by the petitioner from .....

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before the Commissioner of Income-tax that the prize money earned by the petitioner could not be taxed under the Income-tax Act, 1961. It is true that it was at a later stage that such contention was raised by the petitioner, but the said contention was a pure question of law and the Commissioner of Income-tax ought to have considered the said contention on its merits and ought not to have declined to entertain it on the ground of delay. There cannot be any estoppel against the statute, article .....

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authority from March 12, 1935, and that the first occasion when its validity was attacked was in only 1957, though if the petitioners are right in their submissions their acquiescence might not itself be a ground for denying them relief. Before however we set out the points urged by the learned Attorney-General in support of the petition, it would be convenient if we narrate briefly the history of the levy of this tax." The Supreme Court, thus, held that acquiescence to an illegal tax for a .....

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er the Sikkim Tax Manual that held the field at the relevant time and the income-tax from the prize money as per the then existing Sikkim Income-tax Manual was deducted. The order dated June 25, 1991, passed by the Commissioner of Income-tax, Bombay City IV, Bombay, therefore, cannot be sustained and in the light of what we have observed above, the assessment order dated November 29, 1989, for the assessment year 1988-89 shall have to be reworked out as per this order. Consequently, the writ pet .....

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